How Does the Pool Operator Mitigate the Financial Risk Associated with a Period of “Bad Luck” in PPS?

The pool operator mitigates "bad luck" risk in PPS by building a buffer into the fee structure. The fee is set higher than the pure operational cost to cover periods where the pool pays out more in guaranteed shares than it earns from actual block finds.

This buffer acts as an internal reserve fund. Additionally, some operators may use derivatives to hedge against this variance, though it is primarily managed through the fee and reserve.